Not in the Moody’s: China Gets a Downgrade; Tiffany & Co. Fails to Shine; Can’t Contain The Container Store’s Earnings

Awkward…

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Look like Moody’s wont be getting a warm reception from China in the near – and probably far – future. It took thirty years, but the investor service downgraded China’s sovereign credit rating. Moody’s is more than a bit skeptical that the country can get its debt issues under control while at the same time trying to maintain economic growth. Hence, it bumped China’s rating down a smidgen from a respectable A1 to a not-as-respectable Aa3.  On the bright side – though I highly doubt China sees it that way – Moody’s did upgrade its outlook for the country from negative to stable. That’s gotta count for something, right? Well, maybe not to the Chinese. In any case, even though China has enjoyed pretty fast growth rates that easily surpassed 6%, it is apparently due in large part to its mounting pile of debt, and Moody’s said that it expects that rate to soon come down closer to 5%. As for China, the Finance Ministry is, shall we say, unhappy about this downgrade and called the move “inappropriate”  and “absolutely groundless.” Oh well. So much for diplomacy.

Not so Gaga for Tiffany…

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All is not bling-y for Tiffany & Co. as the luxury jeweler took a nasty 4% hit on its comparable sales, even during the fiscal quarter that brings us Valentine’s Day. Of course, with that ugly bit of news came an even uglier hit to its stock, taking it down around 10%. Like with so many other brands, the company just can’t seem to get a hold on that finicky demographic we call millennials.  And that’s even after the luxury brand made Lady Gaga its poster gal while poaching Coach’s Creative Director, Reed Krackoff to add a little millennial-desirability to the the label.  Naturally, some blame also went to that pesky strong dollar of ours which seemed to put a crimp on tourist spending.  Net sales were up close to $900 million. Too bad expectations were for $914 million On the bright side, Tiffany & Co. added 74 cents to its shares, beating analyst estimates by four cents. Last year at this time, the company hauled in over $891 million in revenue with 69 cents added per share.

Can’t contain myself…

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Shares of The Container Store Group surged 37% after announcing it not only beat expectations, but it also has a restructuring plan in the works. If any company knows a thing or two about restructuring and organization, it’s gotta be The Container Store, right? At least when I walk into one of their stores, I always find myself feeling grossly inadequate and disorganized. In any case, the company took in sales of $221 million, easily blowing expectations of $213 million out of the water. The company also took in 17 cents per share which was 140% higher than last year at this time. Yes, you read that correctly. 140%. Analysts expected 11 cents per share. But mind you, the company’s stock had been down around 50% since it hit a one year-high back in December.  As for the restructuring plan, sadly, there will be layoffs. It’s an unfortunate result of trying to combat all the e-commerce competition that has dogged The Container Store and countless other businesses.

The List of Best Companies is Here; Sports Authority Calls it a Game, Files for Bankruptcy; Angie’s List Free as a Bird Now

In good company…

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Because there’s nothing like a list to grab your attention these days, Fortune Magazine just published its latest list of the “100 Best Companies to Work For.”  For the seventh year in a row, Google tops the list. And how could it not? After all, Vince Vaughn and Owen Wilson did make a movie about being interns there, so how could it not be the best company to work for? The Container Store takes the 14 spot. As a customer, I already spend inordinate amounts of time in their stores fantasizing about how organized I could become. Hmm. Maybe I should check the company’s job board. Recreational sporting goods company REI snags the 26th spot. If you recall, they made Glassdoor’s list of companies with the best perks.  Good perks make for happy employees who vote for their own companies to win big on these lists. Publix Supermarket came in at 67. As the largest employee-owned company, Publix has extremely low-turnover and plenty of perks that keep employees satisfied for decades. You might want to check if your company is on the list. If not, then consider tidying up your LinkedIn profile as there are currently over 100,000 job openings at these companies that are just waiting to be filled.

Disregard for authority…

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Sports Authority has gone bust and is set to start closing its doors at about 140 locations as early as tomorrow, including 25 stores in Texas and 19 in California. Sports Authority managed to rack up $1.1 billion debt as it failed to keep up with current consumer trends. There’s a chance that another company will pick up Sports Authority’s debt-riddled pieces and give the sporting goods company a second profitable chance. But if April comes along and Sports Authority has no buyer, it will throw in the proverbial fiscal towel and close down its remaining locations. If you have any gift cards for Sports Authority, you might want to use ‘em up NOW while Sports Authority still honors them. Need to return or exchange merchandise? Good news! You still can…as long as you’re near one that didn’t close. Warranty related issues keeping you awake at night. No worries. Sports Authority can still service those items. Sports Authority is even carrying on with its customer loyalty program (there’s a joke in there somewhere) – at the locations that are still open anyway.

Free ‘em up…

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Angie’s List will now be free for the masses. Sort of. The review site will now allow visitors to read reviews and ratings…without having to fork over the security codes on their credit cards. However, tiered subscription services will be offered to those looking for a few extra benefits not included in freemium subscriptions. There’s going to be a $24.99 silver subscription and a $99.99 gold subscription. While those offers might seem a little pricey, they come with big benefits like an emergency service hotline and fair price guarantees. A small price to pay for some big peace of mind. Even though the company went public way back in 2011, it didn’t churn out its first annual profit until 2015. But today, shares went up almost 4% on the news, especially because this freebie subscription idea was all part of a bigger plan to help the company grow and make it more profitable. It’s also a major reason why the site dissed IAC’s HomeAdvisor’s bid last year. Angie’s List found the $512 million, $8.75 per share bid a lowball offer and said it undervalued the site. According to CEO Scott Durchslag, who has held his post for just six months, the current model made it harder for the company to grow. Besides, the company felt that millennials aren’t going to bother paying for reviews and it does seem to be all about those pesky millennials lately, doesn’t it? Angie’s List did have to revise its full year guidance and now expects to take in between $345 million and $355 million when analysts were expecting numbers closer to $362 million. The reason being is that 20% of the company’s revenue comes from those subscriptions. However, the company now figures that, going forward, it will be able to hit $750 million by by 2020. Angie’s List brass are expecting to “see traffic explode” under this new model.” The site currently has approximately 3.3 million subscribers but expect that number to catapult real soon.

Yahoo for Snapchat?; Why SodaStream Fizzled; The Container Store Coming Up Short

Make it snappy…

Image courtesy of KROMKRATHOG/FreeDigitalPhotos.net

Image courtesy of KROMKRATHOG/FreeDigitalPhotos.net

There’s an expensive little rumor going around that Yahoo is about to plunk down a hefty $20 million to become a part of the magic we call Snapchat. However, the app that has around 100 million users, and doesn’t generate much in the way of revenue, has got some wondering what exactly Snapchat sees in Yahoo. After all, Snapchat already dissed offers from both Google and Facebook. Snapchat, whose valuation is currently pegged at a not-so-modest $10-$20 billion, depending on whom you ask, is getting ready to prance around its latest offering, Snapchat Discovery. In case you hadn’t heard, that service is for professionally produced content, and like regular Snapchat, the content would still disappear after a certain period of time. Good thing Yahoo has been scooping up scads of professional producers to come up with new content. And let’s face it, Yahoo does have a certain knack for distributing all kinds of entertaining and useful content, apps and of course, the all-important ads, which is something from which Snapchat could surely benefit. As for Yahoo, well it needs something to do with all that money it made off of Alibaba Group.

Fizzled out…

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Image courtesy of Suat Eman/FreeDigitalPhotos.net

Just because you’ve got Scarlett Johansson shilling for you, doesn’t mean your earnings are going to be just as star-studded. Case in point: SodaStream, the Israel-based company that went public in 2010, and which just saw its shares plunk down to a new low. Shares of the soda machine-maker fell below $23.00 for the first time. Ever. The company’s own predictions forecasted a 13% hit in its revenue, falling to a paltry $125 million. Certainly, the fact that Coca Cola, together with Green Mountain Coffee, are parading out its own version of a soda-making machine aren’t helping matters. So like every other company with food and beverage offerings that has taken a fiscal punch, SodaStream has made the decision to shift its focus to “health and wellness.”

Contain yourself!

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Image courtesy of graur razvan donut/FreeDigitalPhotos.net

With a name like “The Container Store” you can’t go wrong. Or can you? Shares of the company took a big a harsh 11% hit after reporting its second quarter earnings. It seems  the company failed to sell enough “containers” and such. Even though it earned over $193 million in revenue, it was several million short of Wall Street predictions. However, all was not lost as the company still managed to pull in an $0.11 per share profit.

Banking on a Citigroup Settlement,

Big Citi blues…

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Image courtesy of digitalart/FreeDigitalPhotos.net

The latest un-shocking revelation coming from the banking industry is that Citigroup is about to cough up $7 billion to settle charges that it sold bad mortgages. The only truly shocking aspect of the story is that the nation’s third largest bank (in assets) thought it was going to get away with lowballing the Department of Justice with a $4 billion offer to settle. The DOJ was initially seeking $10 billion. At least Citigroup now gets to shake off thoughts of a lawsuit. Besides, Citi got off relatively easy compared to JP Morgan who had to dig deep into its pockets for $13 billion – the largest settlement in US history – so far.  Proceeds from the settlement will be divided between consumer relief and government fines. Stay tuned since Bank of America is rumored to be the next bank to ride the multi-billion dollar settlement express train.

Contain yourself…

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Image courtesy of supakitmod/FreeDigitalPhotos.net

The Container Store (TCS) posted earnings that all but bummed Wall Street. CEO Kip Tindell attributed the disappointing earnings to a “retail funk.” There is nothing fun (or funky) about that – for The Container Store anyway, since it apparently means that consumers have been opting to spend their hard-earned money on pricier items like cars and homes instead of plastic storage solutions. The nerve. While net sales increased way over 8% from a year ago to $173.4 million, analysts wanted to see $174.21 million. The company posted a loss of $.07 a share instead of an expected $.06 loss per share. Those seemingly innocuous pennies unfortunately, caused a big drop in shares today. The Container Store currently has 60 stores and wants to open a total of 300. And while the idea is, shall we say industrious, the fact is the company reduced its fiscal guidance which tends to be a big red flag to investors.

Heir apparel… 

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Image courtesy of iosphere/FreeDigitalPhotos.net

American Apparel is apparently getting a $25 million fiscal infusion from Standard General to help boost its finances and pay off a $10 million loan to investment firm, Lion Capital. It’s just the latest episode in the retail chain’s seemingly never-ending drama. Lion Capital argued that American Apparel defaulted on the credit agreement when it made some management changes, namely ousting CEO Dov Charney. The CEO, who was ousted for “alleged misconduct” signed a five year loan agreement with Standard General which does increase his stake to 43%, but forbids him from voting, that is, unless Standard General says he can. However, considering Charney already violated the terms of his ouster when he brazenly walked into a Lower East Side American Apparel store, exercising his voting rights will are the least of his issues.